Economics and taxation in the digital economy

TECHNOLOGICAL advancements have dramatically changed global trade of goods and services, placing immense pressure on internationally-accepted principles governing the taxation of cross-border business income.

Today, businesses can transact without being physically present in a market; this is increasingly the reality for many businesses across not only retail but other sectors. As this continues to be the new normal, countries have increasingly found it more difficult to tax business income earned in their territories by foreign corporations under existing international tax frameworks.

In the face of this new reality, we are already seeing certain countries starting to adapt their tax laws. As more businesses adopt digitalisation strategies, new tax laws that apply beyond GAFA (Google, Amazon, Facebook, Apple) businesses are being put in place, becoming applicable to brick-and-mortar businesses that operate globally as well.